Friday, March 22, 2013

Friday Morning’s Cyprus News

I can’t document this, but the coverage in the news now makes pointedly clear that the initial proposal to tax both large and small bank accounts was driven by fear in the Cypriot government that the inflow of funds from Russia would dry up if large depositors were singled out.

Central bankers are coordinating measures in which overseas branches are being cut loose from their home banks back on the island.

Cypriot banks are still putting cash in some ATMs, although the maximum daily withdrawal has been cut by 2/3 (to about $300), and the maximum withdrawal in each ATM session is being held to about $50. Clearly there isn’t any more coming in from anywhere; so this is a bank run in slow motion.